Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Dear Bev,
It is frustrating to have great relationships with clients and centers-of-influence (COIs) but virtually no one refers, especially considering how many people we know. Too few of our happy clients refer to us. Is this normal?
I read studies that say the top-performing advisors are experiencing, on average, 25% or greater organic growth each year. We are nowhere near this. We could be if we had the referrals from everyone who identifies themselves as happy. We ask. We provide opportunities at events. We tell clients we want to grow. We think they know our value proposition and can talk to others.
What’s missing? What do we need to do differently? It is an ongoing discussion in our firm but we don’t get answers.
L.C.
Dear L.C.,
How are you growing right now? It can be difficult to benchmark yourself against the “top-performing advisors” when you don’t know whether their business model is like yours or not. I was just having this conversation with a client of mine. Her firm has been growing about 10% each year, bringing in assets of close to $75 million, so not a small amount. She was lamenting that it isn’t 25% “like the top advisors,” but maybe it is good enough for their firm. Maybe the top is a small subset of the general population. I say this only because I believe it is dangerous when you measure yourself against others when you don’t have the facts and data to support what they are doing and how it might differ from what you are doing.
That said, there are likely referrals hiding in your client base and with your COIs. It sounds like you have been focused on trying to obtain what you can – you are asking clients and COIs and your firm is putting a focus on this. You are trying to examine what you are doing well and what you could do differently. At least you are asking the right questions!
There are a few things to consider – I have had a number of conversations with clients of my advisor firms and COIs they have excellent relationships with to know that clients often don’t know how to tell your story, even if you believe they do. They aren’t really comfortable talking to their friends and relatives about their nice financial advisor. Money is a difficult topic even within families, and certainly between friends, so engaging them and helping them become comfortable with recommending you takes more work than just asking them for “who do you know?”
You could be asking, but you might not be arming them. In other words, they could want to help you, but they really don’t know how. Educational sessions, or events as you outline could be a good way of creating a forum but you might want to consider more personalized approaches.
Identify a handful of clients who are really friendly to the firm and consult with them on what you need to do differently in order to increase referrals from your client base. I’m going to bet you will hear them say they just don’t know how to talk about what you do. So, make it easy for them. Offer to buy lunch or dinner for them and a valued friend or client just to make the contact. Offer to come to their place of work and give a “free” session on financial trends or market expectations. Share interesting information like how to understand risk, or why using a 529 might not be the best way to save for college education. The more personal and specific you can make it, the easier it will be for them to engage a friend or two.
Same with COIs. Remember they are inundated with advisors just like you who want to work with them. All advisors essentially look the same to an accountant or attorney. Help them define why you are different. Help them grow their business by providing interesting financial information to their clients.
Get into the shoes of the client or the COI and see your world from their lens. It seems obvious to you, but it isn’t so obvious from their seat as to how to help you. Help them help you in a more proactive and effective manner.
Dear Bev,
When the market is great, no one wants to change their advisor because everything is working well. When the market is terrible no one wants to change because of the fear factor – don’t move when things are terrible. When is the right time for clients to want to switch their advisor?
T.U.
Dear T.U.,
This strikes me as a bit of a rhetorical question – not sure it has an answer. I have advisors who have brought in several new clients when markets were good, and did likewise when markets were challenging. There are always do-it-yourselfers who finally realize they don’t want to do it anymore. There are people in transition – divorce, selling a business, retiring, losing a spouse and so on who need support working through the transition. There are investors who become disillusioned with their advisor because he/she does not reach out proactively enough or does not provide good education. In my world, there are many scenarios where clients are looking for a good advisor and want to find one.
If you are not getting your fair share of new clients, consider whether you are looking for them hard enough! Do you have a good system in place for client referrals? Do you have a clear niche market and are you talking to your market about what they need and what you can do for them? Do you have strong COI relationships and have you taken the time to ensure they know what you do and why it’s better and different from other advisors? Do you have a growth plan in place?
I hear the challenge in what you are saying, and I acknowledge there is some truth to it – if it’s working, why try and fix it might be the mantra for many investors, but that doesn’t mean you throw up your hands and assume no one needs the financial help your firm can provide!
Perhaps you need to think more holistically about other offerings. If you are purely investment-management oriented, consider how you can help your clients with other aspects of financial planning. Get creative and challenge yourself to find what you are missing. You might find your views change significantly as a result.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. In 2008, she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers. She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here. 
